Throughout an accounting period,the fees for legal services paid in advance by clients are recorded in an account called Unearned Legal Fees.What is the end-of-period adjusting entry to record the portion of those fees that have been earned?
A)Debit Cash and credit Legal Fees Earned.
B)Debit Cash and credit Unearned Legal Fees.
C)Debit Unearned Legal Fees and credit Legal Fees Earned.
D)Debit Legal Fees Earned and credit Unearned Legal Fees.
E)Debit Unearned Legal Fees and credit Accounts Receivable.

Question

Quizplus · Accepted Answer

The end-of-period adjusting entry to record the portion of unearned legal fees that have been earned is to debit the Unearned Legal Fees account and credit the Legal Fees Earned account. This is because the fees were initially recorded as unearned until they are actually earned by providing legal services to the clients. Once the services are provided, the portion of the fees that have been earned need to be recognized as revenue and moved from the Unearned Legal Fees account to the Legal Fees Earned account. This adjusting entry reflects that change in account balances.

Throughout an Accounting Period,the Fees for Legal Services Paid in Advance